All Forum Posts by: Javier D.

@Josiah Sia

Hi Josiah,

I think its a great goal and agree paid off assets is the way to go with this stuff. Why people get into such a huge investment vehicle to make 100 bucks a month drives me crazy. With that said here is my take:

Real Estate is best when leveraged up until a certain point. In the growing stage I would not quite do it so fast as to hinder growth. I started with SFHs in 2011. I was doing alot of flips and construction for banks(REO contractor) so money was good. At this point knowing this wouldnt last forever I started putting down payments with private loans from a good friend of mine. I would either refinance or just pay it off. Granted these homes were 70-100K(now worth 250-300) but ended up with 15 paid off assets. If i had done one by one and doing immediate paydown i would not have gotten to that number so quickly. What I did in the past few years is ive recapitalized on a couple of these, 3 to be exact and leveraged 6 duplexes 75%. I sold one more plus some additional money and got into a 40 unit. My point is dont stick to one thing. You can keep that paydown money as a reserve account and let tenants pay mortgage. Dont hinder growth. You'll get to your number much faster while still being VERY conservative as I am. Itll come to you as you're growing what to do. You'll sell one to pay off others or get into a better property. Opportunities will open up as you get bigger, more income, more net worth. Good luck!

@Peter T.

Going rate here is 5% for 30+ units.

A full time employee manager 600-700 a week.

@Matt R.

I have a reserve account in a high yield savings account equal to 6 months gross rents for all my properties. Less than 4-6 months is not enough imo.

@David West

90 days will be more like 6 months.

Expenses

6% commission

1-2% closing costs depending on how expenses are done in your state

Holding costs :

6 months taxes

Insurance?

Cleaningx2

Landscaping 3 months

Utilities

About 30k . Probably 25 when its all said and done with the construction depending on what work you’re doing.

Id buy it.

@Zack D'Aiello

Get rid of it.

Tell tenant you’re planning on selling. Hopefully they start looking for a new place. Talk to a broker asap and get an analysis done.

Once you’re ready come at the tenant with some viable options. Figure you have 400 bucks x 3 months to play with.

@Greg Dickerson

Do you think doing an LLC purchase I can have them be a second position lienholder? I've done the llc purchase thing before and bank considered it a refi but im not familiar with more than 1 loan on a commercial property. If seller has a concern of being wiped out or something I'd like to be able to answer them honestly.

@Jay Hinrichs

Thanks for the quick response.

Good afternoon BP,

I have a potential purchase where I offered the owner to buy two of their apartment buildings.

I can secure financing for it but their concern is paying taxes and finding something else to 1031 into. I sort of winged it and pitched them to instead be my bank. Its a 2.7 million purchase.

My plan was to put down 20% as my lender lets me do.

The seller at this point got pretty interested and we are sitting down next week to work out numbers and discuss further. I know they have a loan balance of 1.4 on the property so here is where im stuck. I originally told them we could do 20% down with a 5% fixed 10 years (about 3% over libor) similar to what bank would do for me. I advised them to consult with an attorney and their CPA so they could be better informed and if they have any concerns we could discuss.

So my question is : how do i address their existing mortgage with my offer?

@Jay Hinrichs

Would a recorded promissory note along with mortgage papers hold up usually? I can see the quitclaim deed issue not being recorded as between purchase and default the title can change hands again , have the investor put his own debt on it etc .